Under government rules, academy trusts are considered to be a Contracting Authority. This means that they are subject to further government guidance around procurement (one of which in normal times would be the application of OJEU rules).
However with the economic uncertainty that has arisen with COVID-19, the government have issued a Procurement Policy Notice that will be applicable to academy trusts.
The stated aim of the policy is to ensure that service delivery continues during (where possible), and after the COVID-19 outbreak.
The guidance goes as far to say: “Contracting authorities must act now to ensure suppliers at risk are in a position to resume normal contract delivery once the outbreak is over."
All contracting authorities should:
For the average academy trust, over 70% of their costs will be payroll, so not applicable to the above guidance.
There will then be a large number of low risk suppliers (i.e. local authority, energy suppliers etc) and also a number of one off suppliers used throughout the year. The area of focus will need to be the suppliers that you use on a regular basis (and have a contract with). This could include services such as:
Key issues for the academy trust when implementing this process include:
The last bullet point is particularly relevant.
Managing Public Money prohibits payment in advance of need, and it is considered novel and contentious. Consent has temporarily been granted until the end of June 2020, but only where the Accounting Officer is satisfied regarding the VFM case by securing future delivery. Also this consent is capped at 25% of the value of the contract. You must document this to Accounting Officer.
An important point to note is that this guidance is very much about the cash flow, and not about the cost. So even if you are paying out cash, if the service has not been delivered, (unless there are some unusual terms in the contact) then the payments made will be prepayments in your monthly accounts.
Academies are probably well placed to be able to comply with this guidance, due to the recurrent grant nature of funding received from the ESFA. However, you will still need to manage your cash flow carefully.
If you have any queries please contact Ben Thorne or your usual Bishop Fleming contact.